February 4, 2014

Click here for a good article on the economic impact of the Keystone pipeline. gg found Washington’s point interesting. gg will need to look at the numbers a little more closely to confirm.

But the real story here is not Keystone. One of the main reasons that the industry has focused so much on refined oil products to make money is because crude oil is now a process. The oil that we can get out of the ground (globally as well)moving forward, even with new technology, is very crude, that requires more and more expensive refining processes to make it usable for anything, especially gasoline. Expensive wells and expensive processing requires debt. We are in a global debt collapse. Anything connected with debt will become more expensive. And since the US has set up an infrastructure so dependent on cheap oil, prices must continue to go up long-term. And if we are smart, we will start using oil to set up a more diverse infrastructure, but even that will be expensive.

This is the reason gas prices will continue to go up regardless of the petro-dollar. But changing the petro-dollar will certainly have an impact. It is these things that make gg continue to write about peak oil. Peak oil is not about no oil: it is about the grade of crude available and the expensive processes to get it out of the ground and form it into something useable.

As I stated a few days ago, the US GDP driver is exports, dominated by oil-energy exports. Chances that the government will do anything necessary to continue to keep exports up is very high.

January 21, 2014

In the informational age, missing reporters and/or their computers always make gg’s ears perk up. It usually means that they ran into a major truth. gg is always interested in the real truth. Here is a US reporter who was writing about the US oil glut that has not been seen for 11 days. Click here. Read the article carefully to see the truth and what might happen in the near future, barring extended market manipulation.

Updates: gg just heard a radio interview in which it was suggested that the oil/energy glut, thus over-production/lowered prices, was going to/is creating more investment from businesses, jobs, and economic growth. That is not the truth, it is either dumb or a distraction. The truth is hidden in the link above. What is the truth? Why would lower energy prices not cause an increase in economic growth, but something else? Who might be upset about this? Should prices actually be lower, but aren’t? Think, search for the real. Perhaps Pam’s full article will help your search. Click here.

Here are some other articles to help with your research. These articles are not about Shell, it is about how oil companies (and all commodity companies) do business, make profits, and structure their debt. Who owns that debt? Through what investment vehicles do they own that debt? Click here and here and here. Does OPEC make money on oil production/sales or other investment vehicles?

Alongside the pull-back from some western banks, another emerging advantage for the oil majors is the capability to offer more competitive pricing. This is both through their ability to embed derivatives in the physical supply deals they will have with firms in such industries as shipping and also through the fact they aren’t required to add on a credit valuation cost.

“What has happened over the past couple of years is that banks have been pricing in CVA [credit valuation adjustment] for counterparty risk. Oil majors typically do not price in CVA, which in some cases makes them more competitive,” says Standard Chartered’s Koh.

Richard Ng, a Singapore-based venture capitalist with Kind Resources and former co-head of global commodities marketing at UBS, points out that for corporates, embedding derivatives in physical deals avoids mark-to-market losses.

Dodd-Frank has moved commodity derivatives away from US banks and transparency. Derivative contracts (especially losses) may not appear on oil company balance sheets. It also makes market manipulation of the underlying asset very inviting to those with that influence.

This post is in gg’s humble opinion, she is not an energy market expert by any means.

March 21, 2013

Totallygroovygirlfriday found this 30-minute video very interesting. If you are looking for solutions and a way to get to them, this video has some great tools/suggestions (more than just about money). Click here.

Well, this is certainly an interesting Monday morning. If they were looking to stabilize and create confidence in the European and global banking systems, gg thinks they missed.

This is just one more lesson in the past 5 years. Banks are not a safe place to keep money, you will be penalized for saving money, and saving the current collapsing system is the prime directive.

side musing: it also confirms what Martin says, there can be no conspiracy because they have no idea what they are doing five minutes before they do it. A well-thought-out plan would not piss off the Russian government. The powers-that-be are only reactionary and use every new crisis (whether they indirectly created it or not) as much as possible to retain power, influence, and wealth until it doesn’t work anymore. Then they move to the private sector and use their reactionary-crisis skills to destroy investor funds.

Update: seems to be going well…yeah right! They just extended the “bank holiday” to Wednesday/Thursday. Click here.

Another update: it just keeps getting more interesting. Problem is that Europe/IMF doesn’t have time for another option to bail out Cyprus, this was it (or Germany front the money…..) Click here. So more interesting than the Russian mob money, the citizen riots, and what this will mean for future “bailouts” of southern European countries is: what will they do in Cyprus, if they don’t do this?

February 18, 2013

LEAP 2020 has just released a new report. They have a detailed summary for free here.

Second half of 2013 still doesn’t look good. Very important link to read. It is from an European perspective. Melt this with US perspective (the real perspective, not the MSM Disney one) and you probably have the truth.

With no surprise, one of the powerful factors which will accelerate the United States’ loss of influence in the world relates to oil. In fact we are witnessing the last days of the petrodollar, the key element of US domination. This is why we have decided to deal with the world oil problem at length in this GEAB. We are also publishing the GEAB Dollar-Index and Euro-Index to follow currency developments more reliably in the current monetary storm. Finally, as usual, we finish with the GlobalEurometre.

groovygirl says: gg has mentioned before that the petro-dollar is the source that will lead to the collapse in confidence in the dollar and end its reign as a reserve currency. We are already seeing this. The currency war is on between those holding dollars and those that print dollars. The US dollar either will be devalued and force the other global currencies to crash or it is “revalued” as part of the global trading currency those main purpose will be to value energy and oil. The longer the US waits to “revalue”, and the less negotiating power they will have. Neither option will fair well for the national economy in the US. High energy prices, and we have enjoyed cheap energy prices due to the position of US dollar, are over.

The US economy is based on cheap energy, a loss of that means a long decline in the economy. On top of that, this will occur during a loss of confidence in the US ability to repay it debt. Therefore, the new debt will be hard to get or expensive, so a new infrastructure that is not dependent on cheap energy will be expensive, a long process, and/or impossible. All of this means an extension of what we have seen already, but worse: high unemployment, higher cost of living expenses, slow economic growth, if any, more government fees and taxes to make up short falls in fallen tax revenues.

Do you see how just a modification in the petro-dollar can cause a crash in the economy, high inflation in prices, and a long-term depression (or worsening of what we are in now)? If people are restless now, they will be despondent under worse circumstances. This slope to the bottom starts with pressure on the petro-dollar.

February 4, 2013

Click here for Martin’s thoughts on the energy cycle, very important chart. And here, another post from the same day. A $175 oil price would greatly impact inflation in prices and the broad economy. It is unclear whether a Middle East Crisis, another global debt crisis, an abandonment of the petro dollar, or a crash in the USdollar would cause a $175 oil price and for how long.

C.C.: The bank-centric US dollar economy is based upon a vacuum, and although there is a mighty economy behind it, I do not believe that the dollar-based system is sustainable in its current form.

The approach to clearing I advocate does not envisage a central issuer where all the market risk is concentrated, but is rather a framework agreement providing a mutual guarantee of credit obligations created and issued by producers and accepted directly – ‘Peer to Peer’ – by consumers.

L.S.: A crucial legislature in all of this seems to be the Commodity Futures Modernization Act of 2000 (CFMA). Why so?

C.C.: This statute enabled investment banks to conduct the trading techniques which were responsible for inflating market price bubbles.

Side musing: gg says, in relation to yesterday’s post about new systems, there is a possibility that in the future, with the help of the internet, that traditional ways of obtaining debt for business, investment, homes, technology, etc. will all be done without the current banking and financial systems. It will all be peer-to-peer from global to local levels. This will help the little guy in the local community get things moving in a new decentralized system and the larger player move in the globalization system.

November 30, 2012

Groovygirl has often talked about the paradigm shift happening right now in every aspect of global structure. From debt collapse to banking to food to government. This paradigm shift is driven by three main issues: debt, increase population and shift in demographics, and peak energy.

Since the beginning of the industrial age, these main systems have worked well. Or they have been modified to continue to work adequately to move forward, not back. However, the production model which is the basis for everything in first world countries from food production to derivatives to education to military doesn’t work anymore.

We have clearly moved into the information age, but the main systems of society are still in the industrial age. Charles Hugh Smith makes a comparison to the last time we had a major shift: from agriculture to industrial. The final push of all society into industry/production systems was the Dust Bowl, even though the Industrial Age started 50 years earlier.

The systems and solutions of the past will not work. It is a waste of energy to focus on those things. Much better to discuss completely other ways of doing things. Having said that, the possibility that people in power will give up their power in a known system for no power in a new systems is highly unlikely. So, we will have to wait for the collapse of these systems. In the meantime, be thinking and experimenting in your own limited environment to find out what might work or not work.